Source Energy Services Reports Q4 2024 and Year End Results

CALGARY, Alberta, Feb. 26, 2025 (GLOBE NEWSWIRE) -- TSX: SHLE

Source Energy Services Ltd. ("Source” or the "Company”) is pleased to announce its financial results for the three and twelve months ended December 31, 2024.

2024 PERFORMANCE HIGHLIGHTS

Key achievements for the year ended December 31, 2024 include the following:

• realized sand sales volumes of 3,527,248 metric tonnes ("MT”) and sand revenue of $532.9 million, an increase of $72.8 million or 16% from 2023;

• generated total revenue of $674.0 million, a $104.2 million increase from 2023;
• realized gross margin of $127.3 million and Adjusted Gross Margin⁽¹⁾ of $162.6 million, increases of 16% and 20%, respectively, when compared to last year;
• reported net income of $9.5 million;
• realized Adjusted EBITDA⁽¹⁾ of $123.9 million, a $24.8 million improvement from 2023;
• refinanced the Company's existing credit facilities by entering into a new five-year, US$135.0 million Term Loan (as defined below) and a new $40.0 million credit facility, achieving targeted improved liquidity of $68.8 million at year end;
• announced a partnership with Trican Well Service Ltd. ("Trican”) to construct a unit train capable terminal facility located in Taylor, British Columbia;
• closed two acquisitions for sand trucking assets, further strengthening Source's well site solutions platform;
• completed the expansion of the Chetwynd terminal facility to a full unit train facility; and
• deployed Source's tenth and eleventh Sahara units, both operating on the North Slope in Alaska, driving utilization of 78% across the eleven unit fleet for the year.

Note:

RESULTS

2024

Total revenue for the year ended December 31, 2024 grew $104.2 million, or 18%, to $674.0 million compared to last year. The addition of new customers and continued strong customer activity levels in the Western Canadian Sedimentary Basin ("WCSB”) contributed to the increase in sand sales volumes and revenue for the year. Additional customers and activity levels also resulted in record volumes delivered for "last mile” logistics, and the completion of two new Sahara units late in the year contributed to solid utilization rates for 2024.

Cost of sales, excluding depreciation, increased compared to 2023, due to the higher sand sales volumes realized, as well as increased transportation costs resulting from the record volumes hauled by "last mile” logistics. These volume- driven increases were partly offset by lower costs to produce sand across all mining facilities and the cost savings realized through the acquisition of sand trucking assets completed during the year. A weakening of the Canadian dollar increased cost of sales denominated in US dollars by $1.59 per MT, compared to 2023, which was largely offset by the movement in exchange rates on revenue denominated in US dollars for the year.

For the year ended December 31, 2024, gross margin increased by 17,931, or 16% compared to 2023. Excluding gross margin from mine gate volumes, Adjusted Gross Margin was $46.99 per MT compared to $46.07 per MT in 2023. Adjusted Gross Margin benefited from increased sand sales volumes and sand volumes trucked, lower costs to produce sand, as noted above, and $3.2 million of incremental gross margin generated from the sand trucking assets acquired, compared to 2023. The weakening of the Canadian dollar negatively impacted Adjusted Gross Margin by $0.31 per MT for the year, compared to last year.

Operating expenses increased by $2.6 million on a year-over-year basis, attributed to higher royalty costs associated with increased sand sales volumes, as well as increased insurance and compensation expense due to higher activity levels realized. General and administrative expense increased by $5.5 million during 2024, largely the result of higher people costs, due to increased well site activity and the trucking assets acquired, as well as professional fees for legal expenses and IT costs compared to last year.

Adjusted EBITDA increased by 25%, or $24.8 million, to $123.9 million for the year ended December 31, 2024, attributed primarily to the record sand sales volumes and well site solutions performance, and incremental benefit from trucking assets acquired during the year. Adjusted EBITDA also benefited from the commencement of the leases for Source's tenth and eleventh Sahara units, both now operating on the North Slope in Alaska. The weakening of the Canadian dollar favorably impacted Adjusted EBITDA by $1.2 million for the year, attributed to the movement in exchange rates on the settlement of working capital.

Refinancing Transaction

On December 20, 2024 the Company completed a refinancing of its credit facilities (the "Refinancing Transaction”). Pursuant to the Refinancing Transaction, the Company closed a new five-year term loan (the "Term Loan”) with Silver Point Finance, LLC for total proceeds of $187.2 million (US$135.0 million), and a new revolving asset backed credit facility with Canadian Imperial Bank of Commerce, providing access to funding of $40.0 million. Upon closing of the Refinancing Transaction, the Company repaid all amounts outstanding for the senior secured notes (the "Notes), the Company's prior revolving asset-backed senior credit facility (the "Prior ABL”) and the Promissory Notes (as defined below). The Refinancing Transaction will drive a lower cost of borrowing and injects incremental liquidity into the business, allowing Source to capitalize on anticipated increasing activity levels. Material documents related to the Refinancing Transaction are available under the Company's SEDAR+ profile at www.sedarplus.ca.

Taylor Facility

On July 25, 2024, Source announced the execution of a partnership arrangement with Trican to construct a new terminal facility located in Taylor, British Columbia. Construction of the facility has commenced, and will result in a unit train capable terminal which will accommodate approximately 55,000 MT of sand storage and more than 12,000 MT of daily sand throughput capacity (the "Taylor Facility”). The project is expected to be fully operational in 2025.

Under the terms of the arrangement, Trican will advance funding for construction on a cost-to-complete basis in exchange for transloading and sand supply services, as well as a fee payable to Trican on each advance drawn, repayable through transloading credits at the Taylor Facility and optional cash payments over a three-year term.

Acquisition of Sand Trucking Assets

During 2024, Source completed two sand trucking asset acquisitions, further strengthening Source's mine to well site offering in the WCSB. Source purchased the sand trucking assets of RWR Trucking Inc. for a total aggregate purchase price of $8.1 million, comprised of cash, a promissory note payable and lease obligations for certain of the trucking assets acquired. A second sand trucking asset acquisition was also completed during the year, with PVT Group Ltd., for an aggregate purchase price of $2.2 million, comprised of cash and a promissory note. Pursuant to the Refinancing Transaction, amounts outstanding for the two promissory notes (the "Promissory Notes”) were repaid.